Did a golf-tournament sponsor owe sales tax on goods and services included in an amateur pro-am package when the participant fee itself was exempt?

Plain-English summary

Florida ruled that the golf-tournament sponsor owed tax when it bought the goods and taxable services included in its amateur pro-am package. The sponsor could not treat those purchases as inventory resold tax-free to participants.

The annual event had 52 groups, each with four amateurs and one professional golfer. Each amateur paid a single $5,000 fee and received a package valued at $1,800 that included greens fees, gifts, a draw party and awards dinner, a photo plaque, a preview golf outing, and party favors. Spectators paid a taxable admission to watch the event.

The participant fee and sponsor purchases were separate transactions

Section 212.04(2)(a)8. exempted a participant or entry fee for a sports event when spectators were charged a taxable admission. The amateur fee therefore was not subject to admissions tax.

That did not make the sponsor's purchases exempt. Rule 12A-1.005(3)(j) treated the sponsoring organization as the end consumer of taxable items it used for the event, even when participation-fee revenue paid for them.

The Department identified food, drinks, gift packages, party favors, greens fees, the preview outing, and photo plaques as sponsor purchases rather than goods or services resold to the amateurs. The sponsor was responsible for the applicable tax when buying them.

Why this was not prohibited double taxation

The participant purchased an admission or participation right. The sponsor separately purchased goods and services used to provide the event package. Because the transactions involved different taxpayers, taxable privileges, and end consumers, taxing the sponsor's purchases did not duplicate tax on the exempt participant fee.

What this means for you

Sports-event and tournament sponsors

An exempt entry fee does not automatically create a resale exemption for gifts, meals, greens fees, favors, awards, or other package components. Budget sales tax into sponsor purchases unless a separate exemption applies.

Golf clubs and vendors

The sponsor's payment for greens fees and other taxable items remained taxable even though the amateur's bundled event fee was exempt from admissions tax.

Accountants and tax professionals

Identify the end consumer for each transaction. Participant-fee treatment and the sponsor's acquisition of package items are separate analyses.

Common questions

Q: Was the amateur pro-am fee subject to admissions tax?
A: No. Spectators were charged a taxable admission, so the participant-fee exemption applied.

Q: Could the sponsor buy package items tax-free for resale?
A: No. The ruling treated the sponsor as the end consumer.

Q: Which purchases did the ruling identify?
A: Food, drinks, gift packages, party favors, greens fees, a preview golf outing, and photo plaques.

Q: Did bundling the items into a $5,000 participant fee change the result?
A: No. The sponsor's purchases remained separate from the participant's exempt entry transaction.

Citations and references

• Fla. Stat. § 212.02(1) — admissions definition
• Fla. Stat. § 212.04(1), (2)(a)8. — admissions tax and sports participant-fee exemption
• Fla. Admin. Code r. 12A-1.005(2)(i), (3)(j) — exempt participation fees and taxable sponsor purchases
• Fla. Stat. § 212.12(12) — end-consumer rule and avoidance of tax pyramiding
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 04A-019

Original ruling text

SUMMARY

QUESTION: Whether goods and services purchased by a Golf
Tournament Sponsor that are provided to Pro-am participants
as part of the participant's package are subject to the
sales tax when purchased by Sponsor.

ANSWER - Based on Facts Below: Yes. The Sponsor is the end
consumer because the purchase of taxable items purchased
involves a separate and distinct tax privilege from the
sale of the admission to the Pro-am participant and not a
resale of the items purchased.

Mar 24, 2004

Re: Technical Assistance Advisement - 04A-019
XXX (Sponsor)
Sales and Use Tax - Purchases by Golf Tournament Sponsor
Section 212.04, F.S.
Rule 12A-1.005, F.A.C.
FEI#: XX

Dear :

This is in response to your request for a Technical Assistance
Advisement regarding fees paid by the amateur participants of a
Pro-am event of which the participants receive additional items.

FACTS

Sponsor is in the business of operating a Professional Golf
Association sanctioned golf tournament. As part of the
tournament, Sponsor offers a Pro-am event (Event), which is held
annually on Tuesday of the tournament week. The Event consists
of fifty-two groups of golfers. Each group is comprised of five
individual golfers, four amateurs and one professional. The
amateurs pay XX each to participate, in a single lump sum
charge. Spectators are charged a taxable admission to view the

Event. As part of their $5,000.00 fee, the amateurs receive the
following tangible goods and services valued at $1,800.00:

1. Greens Fees for a round of golf
2. Gift package

XXXX
XXXX

3. Draw party and awards dinner

XXXX

4. Photo plaque

XXXX

5. Preview golf outing

XXXX

6. Party favors

XXXX

APPLICABLE STATUTES AND RULES

Section 212.04(1)(a) and (b) and (2)(a)8., F.S., provide in
pertinent part:

(1)(a) It is hereby declared to be the legislative intent
that every person is exercising a taxable privilege who
sells or receives anything of value by way of admissions.

(b) For the exercise of such privilege, a tax is levied at
the rate of 6 percent of sales price, or the actual value
received from such admissions, which 6 percent shall be
added to and collected with all such admissions from the
purchaser thereof, and such tax shall be paid for the
exercise of the privilege as defined in the preceding
paragraph.... The sale price or actual value of admission
shall, for the purpose of this chapter, be that price
remaining after deduction of federal taxes and state or
locally imposed or authorized seat surcharges, taxes, or
fees, if any, imposed upon such admission....

(2)(a)8. Also exempt from the tax imposed by this section
are participation or entry fees charged to participants in
a game, race, or other sport or recreational event if
spectators are charged a taxable admission to such event.

Section 212.02(1), F.S., defines the term "admissions" as
follows:

(1) The term "admissions" means and includes the net sum of
money after deduction of any federal taxes for admitting a

person or vehicle or persons to any place of amusement,
sport, or recreation or for the privilege of entering or
staying in any place of amusement, sport, or recreation,
including, but not limited to, theaters, outdoor theaters,
shows, exhibitions, games, races, or any place where charge
is made by way of sale of tickets, gate charges, seat
charges, box charges, season pass charges, cover charges,
greens fees, participation fees, entrance fees, or other
fees or receipts of anything of value measured on an
admission or entrance or length of stay... in any place
where there is any exhibition, amusement, sport, or
recreation, and all dues and fees paid to private clubs and
membership clubs providing recreational or physical fitness
facilities, including, but not limited to, golf....
(Emphasis added.)

Section 212.12(12), F.S., provides:

(12) It is hereby declared to be the legislative intent
that, whenever in the construction, administration, or
enforcement of this chapter there may be any question
respecting a duplication of the tax, the end consumer, or
last retail sale, be the sale intended to be taxed and
insofar as may be practicable there be no duplication or
pyramiding of the tax.

Rule 12A-1.005(2)(i) and (3)(j), F.A.C., provides in part:

(2) EXEMPT ADMISSIONS. The following admissions are exempt
from the tax imposed under s. 212.04, F.S.:....

(i) Participation or entry fees charged to participants in
a game, race, or other sport or recreational event when
spectators are charged a taxable admission to such event,
as provided in s. 212.04(2)(a)8., F.S., are exempt....

(3) TAXABLE ADMISSIONS AND PARTICIPATION FEES. The
following paragraphs contain examples of admission charges
that are subject to tax, unless such admissions are
specifically exempt under the provisions of s. 212.04(2),
F.S. This list is not intended to be an exhaustive list....

(j) Charges made for the privilege of entering or engaging
in any kind of activity for which no admission charge is
made to spectators are subject to tax. When spectators are
charged a taxable admission to a game, race, or other sport
or recreational event, the participation or entrance fees
are exempt. The purchase of taxable items used by the
sponsoring entity are subject to tax, even though receipts
from charges for the participation or entrance fees are
used to make such purchases....

2. EXAMPLE: A sponsoring golf association enrolls
   participants to participate in a tournament for a fee of
   $100.00 with $20.00 of the fee attributable to
   organizational services provided by the sponsor and $80.00
   attributable to the club's charges for an unlimited number
   of rounds and the use of a golf cart, with the excess being
   used to purchase gifts, gift certificates, and trophies to
   be given to the winners. No tax is due on the $100.00 fee
   paid by the participant to the sponsoring organization. The
   $80.00 entry fee paid by the sponsoring organization to the
   club is taxable, even if the charge for each item is
   separately itemized. The purchase of gifts, trophies, and
   other promotional items by the club is subject to tax. When
   participants are given gift certificates to be redeemed for
   merchandise from the club's pro shop, the club is deemed to
   be selling the merchandise and shall collect tax from the
   gift certificate holders at the time the holder redeems the
   certificate for merchandise. (Emphasis added)

TAXPAYER REQUESTED ADVISEMENT

Whether the "goods and services" are exempt from tax when
purchased by the Sponsor for resale to the Pro-am participants
who are taxed for this portion of their tournament fee.

ANALYSIS

Section 212.04(1)(a), F.S., imposes sales tax on the privilege
of selling admissions in the State of Florida. Section
212.02(1), F.S., defines "admissions" to include the total

amount received from participation fees for sport or recreation.
Section 212.04(2)(a)8., F.S., and Rule 12A-1.005(2)(i), F.A.C.,
provide that participation fees are exempt from the tax on
admissions when spectators to the event are charged a taxable
admission to such event, as here. Rule 12A-1.005(3)(j), F.A.C.,
provides that the purchase of taxable items used by Sponsor are
subject to tax, even though receipts from charges for the
participation or entrance fees are used to make such purchases.
This is because there are two separate and distinct taxable
privileges being exercised in two separate and distinct taxable
transactions, and for each transaction there is a separate and
distinct end consumer for purposes of applying section
212.12(12), F.S. In American Video Corp. v. Lewis, 389 So.2d
1059, 1061 (Fla. 1st DCA 1980), the Court stated:

A separate tax is collected by appellant from its customers
for the furnishing of the cable television service under
Section 212.05(5). Because of this, appellant contends that
the Comptroller's ruling creates double taxation - a tax on
the drop-in items when purchased by appellant, and a tax on
their use or rental when installed on the premises of a
customer. Section 212.12(12) contains a declaration of
legislative intent that wherever, in construction,
administration or enforcement of the chapter on sales taxes
there may be a question respecting the duplication of the
tax, that the "end consumer, or last retail sale shall be
the sale intended to be taxed and insofar as may be
practicable there be no duplication or pyramiding of the
tax." We conclude, under the facts of this case, that when
appellant purchases these items for its use in providing
television service to its customers, a taxable transaction
occurs; and when the necessary connections are made and the
customer receives his television service furnished by
appellant, a separate taxable transaction occurs. Under the
legislative scheme, the tax on appellant's initial
purchases is passed on to its customers as a part of the
regular monthly subscription. When there are two taxpayers
and two separate taxable transactions or privileges, double
taxation does not occur....

Therefore, as provided by Rule 12A-1.005(3)(j), F.A.C., a

tournament sponsor is the end consumer of the items of tangible
personal property and any taxable services it buys and assembles
as a part of the event for which it charges an admission or
participation fee. Meanwhile, the individual participants are
the end consumers of the admissions they buy. The admissions
are exempt as provided by section 212.04(2)(a)8., F.S., when
spectators are being charged a taxable admission.

QUESTION AND RESPONSE

QUESTION: Whether the "goods and services" are exempt from tax
when purchased by the Sponsor for resale to the Pro-am
participants who are taxed for this portion of their tournament
fee.

RESPONSE: The charge for the admission, the participant fee, is
not subject to the tax, as provided by section 212.04(2)(a)8.,
F.S., and Rule 12A-1.005(2)(i), F.A.C., because a separate
charge for admission is made to spectators. Sponsor is the end
consumer of the taxable items purchased and provided to each
participant as part of a participation fee, as provided by Rule
12A-1.005(3)(j), F.A.C., and section 212.12(12), F.S. As a
consequence, items like food, drinks, gift packages, party
favors, greens fees, preview golf outings, and photo plaques are
not resold. Thus, as to these items, Sponsor is responsible for
any applicable taxes related to these items when purchased.

This response constitutes a Technical Assistance Advisement
under Section 213.22, F.S., which is binding on the Department
only under the facts and circumstances described in the request
for this advice as specified in Section 213.22, F.S. Our
response is predicated on those facts and the specific situation
summarized above. You are advised that subsequent statutory or
administrative rule changes, or judicial interpretations of the
statutes or rules, upon which this advise is based, may subject
similar future transactions to a different treatment than
expressed in this response.

You are further advised that this response, your request and
related backup documents are public records under Chapter 119,
F.S., and are subject to disclosure to the public under the

conditions of s. 213.22, F.S. Confidential information must be
deleted before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department
within 15 days of the date of this letter.

Sincerely,

Charles Wallace
Senior Attorney
Technical Assistance and Dispute Resolution
(850) 922-4734

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